The Converting Curmudgeon​

Labels and tapes and medical devices…oh, my! Parsing the end uses for release liners can be more complex than you imagine. But a series of presentations at the recent AWA Global Release Liner Industry Conference & Exhibition in Vienna, Austria, made plenty of information clearer for the 150+ attendees on hand. Some Converting Curmudgeon bullet points by category follow:

Key end-use components:

With 22.3 billion sq meters of material produced in 2015, labels dominate the overall release-liner market with a 49% share.

Medical applications account for only 3% of the total field at 1.2 billion sq meters last year.

Graphic films, with 2.3 billion sq meters of material, accounted for 5% of the 2015 market.

At 13% market share, tapes made up the second-largest category of release-liner applications, with 5.9 billion sq meters.

And industrial end uses, with an 11% market share, accounted for 5.0 billion sq meters.

Labels:

Label release-liner markets are projected to grow 3.4% a year to 2020 worldwide, says AWA. Asia-Pacific will likely see 5.3% annual growth (the fastest), and North America see a steady 2.3%.

Glassine/SCK paper dominates the substrate range for label release liners with about a 55% market share; other papers make up 30%, and PE, PP and PET films account for the remainder.

Trends: Linerless p-s labels continue to gain interest among CPCs and retailers; Digital direct printing may be a threat in key end-use markets for p-s labels in the short- to medium-term as the technology develops; and intelligent labels are better suited to p-s formats than other methods.

Tapes:

The release-liner field for tapes grew 7.2% last year and is projected to climb at about 7.8% a year to 2020, predicts AWA. Again, Asia-Pacific is forecasted to see 10% annual growth, while North America will see only a 3.8% rise.

Production-wise, Asia-Pacific led global regions in 2015 with a 58% share, followed by North America at 26% and Europe at 11%.

Driving demand for tape release liners is growth in the automotive industry, building & construction in developing countries, and aviation. For example, Groupe Renault estimates that it uses on average 700 sq cm of p-s tapes (and its release liner) in each vehicle.

Medical:

Worldwide production of medical-related liners will grow 7.6% annually to 2020, says AWA. Asia-Pacific will see a rather astounding 17.5% CAGR; North America will see about 7% growth each year.

North America led the world in medical release liner production (70%) last year, Europe had 16%, and Asia-Pacific 11%.

Trends: An aging population worldwide is driving growth along with use and acceptance of disposable medical devices and transdermal patches for therapeutics and pharmaceuticals; ongoing developments in wound care; and a perception of cleanliness is critical to product success.

Graphic films:

At 5.7% growth in 2015, release liners for graphic films is the fourth-fastest growth end use. That rate should continue through 2020, predicts AWA.

Glassine/SCK, clay-coated and polyolefin-coated papers made up 95% of the market for substrates in this application. Different films accounted for less than 5% last year.

Trends: Advertising and branding apps hold the majority of volume while graphic films used for decorative purposes are expected to push future growth; pressure on costs have driven converters and printers to downgrade film materials to cheaper options; and improvements to calendering have increased demand toward calendered vinyl as a substrate.

Industrial:

Production of release liners for industrial apps grew 6.8% in 2015, and globally the segment will climb another 7.5% a year to 2020, says AWA.

Industrial apps are the only end-use segment where PE, PP and PET films make up the majority of substrate bases at a tiny fraction over 50%. Of this, PET films account for about 35%.

North America and Asia-Pacific led industrial release-liner output last year at 45% and 43%, respectively. Europe produced only 10% of world output.

Sustainability issues and cost pressures are the two most important market characteristics and business concerns facing the global release-liner market, according to AWA Alexander Watson Associates’ annual survey of 200+ industry professionals. Results were reported in a White Paper today at the "Global Release Liner Industry Conference & Exhibition" in Vienna, Austria.

Some take-aways:

Globalization

Release liners’ diverse end-use markets have seen demand increase across most of the world’s developing economies, creating growth opps in almost all segments. Almost 70% of all respondents consider their companies to be truly global, while another 19% think their companies will become global in the next five years.

At the same time, regional and local suppliers are achieving successful business platforms without feeling either the need to expand boundaries, or to aim to have a global presence.

Mergers & Acquisitions

More than 50% of respondents anticipate M&A activity to affect their business in 2016. Companies seem to find it easier to grow via acquisitions rather than organically.

Five years from now, 54% of respondents say M&A activity will increase, and only 26% think it will decrease.

Costs & Profitability

More than 70% of respondents experienced a mix of cost increases last year – spanning labor, energy, transportation, and materials – totaling between 0-3%. Most expect similar increases this year, with labor costs leading the way.

Among all respondents, about one-third each said their stocking levels (for inventory management) decreased, increased or stayed the same in 2015 as from 2014.

About 35% increased staffing, 10% cut staff, and 55% had relatively the same number of employees.

Business Sentiment & Innovation

While the release-liner industry in general feels it has made incremental improvements in products and services in recent years, about half of all respondents think there’s a real need for some “true innovation.” A few areas noted as having hit the mark are lower platinum silicone content, radiation curing, linerless labels, downgauged substrates, and reuse & recycling of spent liner.

Next innovations predicted by the survey include compostable films, fully compostable liner and adhesive, easier-to-apply coatings, and more replacement of paper by film liner base materials.

Sustainability & Environment

Sustainability is a major concern for businesses today, and the release-liner industry is no exception.

About half say sustainability/recyclability/eco initiatives are important to their business today; 60% say they’ve taken measurable efforts so far; only about 25% think issues about recycling release-liner waste are affecting their business; and half say these issues will have a major effect on business in five years.

While only 25% of respondents say they are involved in a program to recycle/reuse spent release liner, their answers were surprisingly non-specific regarding the methods used to accomplish this.

Growth

Respondents in North America and Asia-Pacific markets are the most optimistic about their individual business growth for 2016, followed closely by those in Europe.

North American release-liner makers, in particular, forecast their growth like this: 25% expect >8% growth; 20% expect 5-8% growth; 30% foresee 2-5% growth; 20% predict 0-2% growth; and about 5% think their business will decline by 0-5% this year.

The drive to cut costs ranked No. 1 among factors influencing release-liner market growth, with the questionable availability of raw materials in second place. Other items mentioned were non-payment of bills by customers, customers going out of business, available cash, interest rates, and the current economic status of China.

Cultivating social norms often produces more desirable outcomes. Pay employees fairly and competitively; people work harder for a cause than for cash; corporate loyalty doesn’t have to be an oxymoron if the company cultivates a culture that values social norms.

Two primary Culture Factors of the Social Capitalism company: Connectness and Trust.

Connectedness is driven by relationships and a feeling of belonging to a cause. Identify your company’s cause. How does what you do change the world?

Developing Trust = Experience of your employees and customers (reliability, openness, competence, concern) divided by what risks they take in working for or buying from you.